HIF (hypoxia-inducible factor) is an alphabeta transcription factor that modulates the hypoxic response in many animals. The cellular abundance and activity of HIF-alpha are regulated by its post-translational hydroxylation. The hydroxylation of HIF is catalysed by PHD (prolyl hydroxylase domain) enzymes and FIH (factorinhibiting HIF), all of which are 2-oxoglutarate- and Fe(II)-dependent dioxygenases. FIH hydroxylates a conserved asparagine residue in HIF-alpha (Asn-803), which blocks the binding of HIF to the transcriptional co-activator p300, preventing transcription of hypoxia-regulated genes under normoxic conditions. In the present paper, we report studies on possible mechanisms for the regulation of FIH activity. Recently solved crystal structures of FIH indicate that it is homodimeric. Site-directed mutants of FIH at residues Leu-340 and Ile-344, designed to disrupt dimerization, were generated in order to examine the importance of the dimeric state in determining FIH activity. A single point mutant, L340R (Leu-340-->Arg), was shown to be predominantly monomeric and to have lost catalytic activity as measured by assays monitoring 2-oxoglutarate turnover and asparagine hydroxylation. In contrast, the I344R (Ile-344-->Arg) mutant was predominantly dimeric and catalytically active. The results imply that the homodimeric form of FIH is required for productive substrate binding. The structural data also revealed a hydrophobic interaction formed between FIH and a conserved leucine residue (Leu-795) on the HIF substrate, which is close to the dimer interface. A recent report has revealed that phosphorylation of Thr-796, which is adjacent to Leu-795, enhances the transcriptional response in hypoxia. Consistent with this, we show that phosphorylation of Thr-796 prevents the hydroxylation of Asn-803 by FIH.